McClain Resigns as NYRA President

Board leaders will immediately begin a national search to find a replacement.

New York Racing Association President and COO Ellen McClain announced Jan. 25 that she is resigning from her role, and board leaders said they would immediately begin a national search to find a replacement.

"I look forward to working with you during a transition period," McClain told the NYRA board during an open meeting. She had replaced Charles Hayward, who was fired during last year's takeout betting scandal that cost bettors millions of dollars. McClain, who also serves as chief operating officer, was not the Cuomo administration's choice to remain on as the leader of NYRA, administration officials said last year. The state took control of the franchise last year during a three-year reorganization period.

Her announcement was not unexpected, even though she had originally been hoping to stay on as NYRA boss. It came after the Albany Times Union reported she has been negotiating a severance package and after Hayward denied any knowledge of the takeout mistake in which NYRA did not lower, as required by law, the rate on exotic bets for more than a year. Hayward said this week his firing last May by the NYRA board was done "arbitrarily and without cause.''

McClain will be at NYRA until at least March 31 during the search process.

The board deferred action on requests by Hayward and Patrick Kehoe, a former NYRA vice president who lost his job during the takeout controversy last year, until after the state Inspector General's office completes its investigation of the episode. The severance packages could total hundreds of thousands of dollars if granted. She has been making an annual salary of $350,000 as NYRA president, $125,000 less than Hayward's former salary.

The NYRA board formed a committee to handle the search for McClain's replacement, comprised of chairman David Skorton along with Bobby Flay, Stuart Janney III, Earle Mack, and Jane Rosenthal.

Concerned about the quality of racing along with the safety of jockeys and horses, the board also adopted a resolution to reduce the number of race dates during the winter at Aqueduct Racetrack.

Racetracks can be penalized for not holding the number of race dates approved each year by the state racing board. Board members said there could be about seven fewer race dates, but the decision will be left to the NYRA racing secretary about which dates to cancel. The board will also approach the Legislature to allow NYRA flexibility in its date requests to avoid state financial penalties. The board's decision comes after a high number of equine deaths last winter at Aqueduct.

The financial documents show NYRA is also expecting a loss of funds from a new rule extending the time period when trainers are permitted to administer Clenbuterol from three to 14 days. The rule became effective last month in New York.

"Racetracks in surrounding states are currently allowed to continue to administer the medication after three days. Therefore, NYRA anticipates that a number of trainers who previously shipped horses into New York will no longer do so. The projected reduction in horses shipped into New York will have an impact on field size which will have a negative impact on handle. The 2013 budget assumes a $53 million loss in handle on live races, $10 million of which is projected to come from on-track wagers. The projected loss in handle will impact net revenue by $2.4 million," the NYRA financial documents state.

The board also began preliminary discussions—at least in public now that the meetings are, by law, covered by the state's open meetings law—of possible future development ideas, from new restaurants to retail opportunities, at NYRA's properties, especially Belmont.

"Today's a new day," said NYRA board member and celebrity chef Flay. Longtime board members noted that Flay's ideas were not new, but that a number of restrictions—presumably state-imposed—have helped block past ideas to expand facilities as a way to attract new fans.

Board member Mack, meanwhile, requested a formal study to examine how to keep Aqueduct open. There has been speculation that the Cuomo administration may be interested in closing the track.

In other news related to the Jan. 25 meeting, NYRA officials said they expect operating income to increase in 2013 thanks in part to the opening of a new simulcast center at Aqueduct, and due to additional patrons brought to the sport by a new marketing effort that will include everything from fashion shows and a rock concert to New York City subway advertising.

The NYRA board, now controlled by state government appointees since New York government assumed the legal authority to run the racing giant for three years, expects gross revenue of $368 million in the coming year, $93 million of which will come from video lottery terminal proceeds at the Aqueduct casino. Its operating income is projected to total $46 million, up from $42 million in 2012.

The financial figures were posted on the NYRA website in advance of a meeting of the new NYRA board.

Overall pari-mutuel handle is expected to grow 1%, according to projections.

NYRA estimates wagering on all racetracks in the United States will total $10.4 billion in 2013, down 4.5% from $10.9 billion in 2012. NYRA projects it will account for 21% of all Thoroughbred racing handle in the U.S. this year.

VLT revenue at Aqueduct is projected to grow slightly from $90 million last year to $93 million in 2013. Of that, $47 million will go to purses, $26.5 million for capital expenses, and $19.9 million for NYRA operating costs. The estimate is based on 5,000 VLTs bringing in $365 per unit per day.

NYRA's expenses in the coming year will include everything from new HD cameras in the towers at its three tracks, installation of the Trakus System, and a $1.5-million marketing campaign to reach what NYRA calls a new fan base. The revenue will be bolstered in July with the expected opening of Longshots at Aqueduct, a new simulcast facility that can hold 522 people.